External Affairs

Mexico is Now India's Best Customer in Latin America but Trade With Region Has Dipped

Although the region is in the midst of a recession, Latin Americans are keen to boost trade ties with India as part of a strategy to reduce over-dependence on China.

Although the region is in the midst of a recession, Latin Americans are keen to boost trade ties with India as part of a strategy to reduce over-dependence on China.

India Mexico

For the first time ever, Mexico has overtaken Brazil as the top destination of India’s exports to Latin America. Exports to Mexico were $2.865 bn in 2015-16, while exports to Brazil were $2.65 bn. This is not surprising, given the economic recession and political turmoil in Brazil, the largest market in Latin America. India’s exports to Brazil have fallen by 55.5% from $5.96 billion in 2014-15. On the other hand, Mexico, the second-largest economy in the region has been growing and India’s exports to that country have also been steadily increasing. Mexico is the leading destination of India’s car exports in the world. Mexico’s share was $1.03 bn out of the total Indian exports of $5.6 bn. What is even more interesting is that vehicle exports to Mexico have shown an impressive 31% growth from 2014-15.


India’s trade with Latin America declined by one-third to $29.7 bn in 2015-16 from $43.4 bn in 2014-15. While India’s exports have decreased by 27%, imports have also gone down by 33%, to $19.7 bn from $29.3 bn in the previous year. This should be seen in the context of the decline in the region’s total imports by 10% and exports by 13.5% in 2015.

Mercosur remained India’s largest trading partner in the region with $15.9 bn in trade, followed by the Pacific Alliance with $11 bn and Central America with close to a $1 bn. Brazil has overtaken Venezuela to become the leading trade partner of India with $6.69 bn. Trade with Venezuela was $5.8 bn, with Mexico it was $5.1 bn, Argentina $3 bn, Chile $2.6 bn, Colombia $1.69 bn and Peru $1.52 bn.


India’s exports to Latin America have come down by 27% to $10.05 bn in 2015-16 from $13.75 bn the previous year. Exports have shown a decrease in 10 out of the 19 Latin American countries. The region’s GDP contracted by 0.4% in 2015 and Venezuela’s GDP shrank by 7.1%, as did Brazil’s by 3.5%. Another particular reason for the fall in India’s exports is the sharp drop in India’s diesel exports to Brazil from $3.155 bn in 2014-15 to just $564 mn.

Colombia remained the third largest destination for India’s exports, totalling $888 mn dollars (down from $1.1 bn last year), followed by Peru ($703 mn, down from $820 mn), Chile ($679 mn, up from $566 mn), Argentina ($535 mn, up from $460 mn) and Venezuela ($131 mn, down from $258 mn). Among the smaller markets, exports to Guatemala totalled $256 mn (up from $229 mn), $201 mn to Panama (down from $302 mn) and $175 mn to Dominican Republic (up from $141 mn).

Latin America has become the largest destination of India’s vehicle exports, accounting for 19% ($2.7 bn) of the total exports of $14.35 bn in 2015-16. Vehicle exports to the region have increased by 20% from last year. Latin America accounted for 29% of India’s global motor cycle exports with $516 mn. Colombia continued as the top destination with $231 mn, followed by Mexico with $88 mn, Guatemala with $50 mn, Argentina with $50 mn and Peru with $37 mn.

Indian pharma exports to Latin America remained close to a billion dollars. Brazil continued to be the top destination of exports, with $316 mn, followed by Mexico ($153 mn), Venezuela ($74 mn), Colombia ($71 mn), Peru ($62 mn), Chile ($60 mn), Argentina ($44 mn), Guatemala ($31 mn), Dominican Republic ($27 mn) and Ecuador ($24m). In these days of austerity and budget cuts in the region, the affordable Indian generic medicines are preferred by Latin American consumers as well as the governments.


Venezuela has remained the largest source of imports in the region, with $5.7 bn, followed by Brazil ($4.04 bn), Argentina ($2.47 bn), Mexico ($2.28 bn), Chile ($1.96 bn), Colombia ($808 mn), Peru ($820 mn), Ecuador ($564 mn), Dominican Republic ($479 mn), Bolivia ($240 mn) and Paraguay ($112 mn).

The decrease in India’s imports is due to the fall in the price of oil, which accounts for 46% of the total imports from the region. Crude oil imports were down to $9.1 bn in 2015-16 from $20 bn in 2014-15. This is in line with the fall in India’s imports of global crude imports, from $116 bn in the previous year to $66 bn. In 2015-16, Venezuela has maintained its position as the top supplier from the region with $5.7 bn, followed by Mexico ($1.4 bn) and Brazil ($1.2 bn).

South America accounted for 98.6% of India’s soy oil imports last year. Argentina was the major supplier, accounting for $2.2 bn worth of soy oil imports, while Brazil supplied $570 mn and Paraguay $104 mn.

Latin America supplied $2.1 bn of copper out of the total Indian imports of $4 bn, and Chile has continued its position as the top supplier with $1.6 bn.

The region has emerged as a new source for India’s import of gold. Imports from the region have increased to $1.77 bn dollars in 2015-16 from $1.02 bn last year. The suppliers were Peru ($464 mn), Colombia ($442 mn), Dominican Republic ($379 mn), Bolivia ($236 mn), Brazil ($205 mn) and Ecuador ($48 mn).

Latin America is closer to India than you think

For Indian businessmen who still harp on the distance factor, here are some eye-openers:

  • India’s exports to the remote Guatemala ($255 mn) is more than the exports to the neighbouring Cambodia ($143 mn), countries with a population of 15 million each
  • India’s exports to Mexico ($2.86 bn) are more than the exports to Indonesia ($2.84 bn), Myanmar ($1 bn), Russia ($1.6 bn), Canada ($2 bn) and Egypt ($2.3 bn)
  • India’s trade with the distant Brazil ($6.7 bn) is more than the trade with Bangladesh ($6.4 bn), Sri Lanka ($6 bn), Russia ($6.1 bn), Canada ($6.2 bn) and Spain ($4.8 bn). This, even after a 41% fall in trade with Brazil, which was $11.4 bn in 2014-15.
  • Reliance imports crude oil from Brazil and exports diesel back to that country profitably.
  • Latin America is the leading destination of India’s vehicle exports, despite the freight.
  • Chile, Peru and Argentina supply fresh fruits and vegetables to India, undeterred by distance.


Latin America’s recession is predicted to get worse, with GDP contraction of 0.6% in 2016, due to the continuing low international price and demand for commodities and weakening domestic consumer demand. Venezuela’s GDP is projected to shrink by 6.9% and that of Brazil by 3.5% in 2016. However, the region is expected to recover next year, except for Venezuela. Brazil is already showing signs of recovery. The macroeconomic fundamentals of the region are healthier with average inflation of just 5.5% and external debt at just 39% of the GDP.

Latin America, which has huge petroleum reserves and a surplus for exports will continue to be an important contributor to India’s energy security. Imports of gold, minerals and soy oil will increase in the future, in view of the large and growing gap between India’s domestic production and demand. The new development of direct import of gold from Latin American producers rather than through the intermediaries in Switzerland saves considerable foreign exchange for India.

India’s exports to the region have better prospects for increase in the years ahead. There is need for proactive trade promotion as was done successfully during the days of the Focus LAC programme. The government should consider signing free-trade agreements (FTAs) with Mexico, Colombia and Peru to get a level playing field for its exports vis-à-vis exports from the FTA partners of these countries. The Indian government could extend large lines of credit to promote its exports to the the region, as it is successfully doing in Asia and Africa.

While Latin America has a 4.6% share in India’s global trade, India’s share in the region’s external trade is just 1.5%. There is potential for India to increase its share to 5% of Latin America’s foreign trade – $1.88 tn in 2015, with $914 bn-worth exports and imports of $974 bn. The Latin Americans are keen for more trade with India as part of their strategic policy to reduce over-dependence on China and diversify their trade partnership.

Sources of statistics: Ministry of Commerce of India, ECLAC and WTO

Rengaraj Viswanathan, a former diplomat, has served as India’s ambassador to Argentina, Uruguay, Paraguay and Venezuela.